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Anyone into investing?
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ETF's are another option. Less operating costs than Mutual Funds, but are still safe, compared to individual investing.
Mutual funds can be relatively boring, even growth targeted funds, but systematic investing into good ones will probably be the most effective method of building some wealth for a relatively young person.
If you work for an employer who matches your input into a 401K, invest in that first (assuming that they have even a little bit of aggressiveness in their investment options).
While I don't recommend dumping all your cash into stocks, but opening a Scottrade account (or whatever online) that allows you to purchase stocks can be fun. Take a $1000 and buy some stock. My good friend is a financial adviser and his recommendation is to buy stock in companies who sell products you're interested in.
Hard not to make money in the current economy/stock market.
Today, I invest most of my money (70%) in index funds because they continually out-perform the 2050 position. 40% is in a fund that mirrors the S&P 500 index, 25% is in a small/medium cap stock index, and 5% is in an international stock index. I keep the remaining 30% in the 2050 position just because it is stable and decent growth. However, 90% of the time, the index funds have better % returns each day so my YoY is up compared to the 2050 position. I track my positions daily and have a very good understanding of how they perform against each other, yet I probably only make changes to my positions a few times per year.
Generally speaking, younger folks who can tolerate some volatility will want to hold more aggressive positions by investing in stock indexes. As you age, you will want to become more reserved and move away from the stock indexes and more into more stable positions such as bond indexes.
If you are going to trade stocks, you have to educate yourself. If you can't understand how to do the fundamental and technical research on a position, don't invest! It takes a lot of research to be able to understand what you are looking at to determine what's a good stock vs. bad stock. I would say it took me close to 1 year of studying and fake trading with theoretical money that i finally started to become competent enough that I know what I was doing.
My theory is that if you are going to invest in stocks, and you are not a day trader, you need to be purchasing stocks for a long hold. They are usually pretty safe, but you still need to educated yourself before investing. Start with the big name companies in the S&P 500 or DOW.
If you don't feel like tackling the above items, get a Certified Financial Planner to help you out, it's the highest designation in the industry. Most financial planners are going to charge a % of assets under management, either as a fee embedded within the investment where you don't see a transaction to pay the fee or as a separate fee based account where you do see a transaction to pay the fee (this applies whether they are dealing in individual securities or mutual funds, most will do a mix of both now). Though still rare, there are some CFPs providing fee for service accounts now. This is essentially a per-hour charge like you would pay an accountant or lawyer. You're typically on your own as far as executing the plan, or you write a cheque each year for your annual review.
There are good options available in both models. You've probably heard the Warren Buffet line about buying only ETFs and just ride the market. This can be effective for some people, however virtually every study out there has found that invesTOR return lags investMENT return. This is because the vast majoirty of people make poor choices with their money at times, especially during times of stress. This is when actively managed funds and an advisor can be especially helpful.
As a rule of thumb, I would suggest the active manager should be able to pay for him/herself. So if the difference in cost between an ETF and an actively managed mutual fund is 1%, the manager should be able to get gross returns of 1% better than the ETF, and net the same overall return to you.
As for the real estate option it can be great as well. But really the only reasons it might perform differently than stocks/bonds/funds is that a) most real estate "moguls" are hands on with their properties - they do the work themselves. And b) it is soooooooo much easier to leverage into the real estate market. You can walk into the bank with $20k in your pocket and walk out with a $400k property. While you can leverage other investments as well, there are typically a lot more rules, and the leverage ratios are much lower. You may also want to explore Real Estate Investment Trusts - REITS - which are essentially mutual funds for real estate.
Bottom line, if you're just getting started and are looking for help I'd recommend interviewing a few different advisors. Ask about fees, ask about services provided - if they aren't doing everything listed above keep walking -, ask about service structure. Make sure you will get a written financial plan. If they try and sell you something in the first meeting, that's a red flag.
Hope that helps!
I had not been in my account for years and a couple months ago went in and I still have 1 pennie stock that went down down and 1500 shares is now 87 but it is selling at over $2.00 a share.
Big name Stock prices are crazy high now!
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